In 1935, when my grandparents were working, there were more than 40 workers paying into the system for every retiree receiving money from the program. Over the past 70 years, however, that number has plummeted. Today, there are just three workers paying in for every worker taking out.

And that ratio continues to drop. In fact, by the time my 4-year-old twins are in the work force, there will be just two workers paying in for every retiree receiving benefits.

It does not take an economist to understand that fewer and fewer workers supporting more and more retirees means Social Security is on a path to bankruptcy. The system as currently designed cannot be sustained for today's younger workers, much less the workers of tomorrow. That is why Social Security must be fixed now.

And while it is being fixed, we ought to strengthen it for tomorrow's retirees by including voluntary personal retirement accounts.

Personal retirement accounts will give younger Americans the opportunity to build retirement nest eggs of their own. Personal retirement accounts would be voluntary, and, when chosen, would complement a guaranteed benefit that would be similar to the existing benefits paid to today's retirees.

Any plan to fix Social Security must, of course, maintain the current system and the benefits expected by today's seniors and those nearing retirement, such as those in my parents' generation. That's why there would be no changes in benefits, and no personal retirement account option for workers born before 1950.

Since most 25-year-olds are not experienced investors, voluntary personal retirement accounts must also include guidelines to ensure sound investment choices — and to make sure that the money can't be taken out of the account until retirement. Personal retirement accounts should be limited to a select group of conservative, broadly diversified investment funds, such as a secure government bond fund, a corporate bond fund and a stock index fund.

President Bush is promoting investment accounts as a way to keep the Social Security program solvent for many years to come. Opponents say it will do no such thing and will leave younger workers with much-reduced benefits when they retire. AP library photo • March 1, 2002

Perhaps the best aspect of personal retirement accounts is that we know they will be there for today's younger workers when they retire — unlike the current benefits promised under Social Security.

If my twins could have the option of voluntarily putting a part of their Social Security taxes in a personal retirement fund, I would be confident they would still receive a stream of guaranteed benefits when they retire. But they would also have the chance to build a nest egg for retirement, funds that could also be passed on to their children.

Social Security is a great American institution, but it was designed for a different — and distant — era. It's time to make it meet the needs of the workers of today — and tomorrow.

Derrick Max is executive director of the Coalition for the Modernization and Protection of America's Social Security, an organization formed in 2002 by the Business Roundtable and the National Association of Manufacturers.

CON: The money in the account isn't really yours, and the math says you lose

President Bush is waving the carrot of private Social Security accounts in front of millions of Americans who, perhaps too young to remember what happened to stocks five years ago, still think they are going to get rich quick in the stock market.

If you could just take some of that money that Social Security drains out of your paycheck every week, he says, and put it in a private account where you could invest in stocks, how much better off you would be when you retire!

Or would you?

This is a case where it really helps to read the fine print. Although President Bush hasn't announced a comprehensive plan, he did have a "senior White House official" spill some details just before his State of the Union address.

One of the details: The money that will go into the private account isn't really yours. At the end of your working career, you have to pay it all back to the government — plus interest: at the rate of U.S. Treasury notes.

The difference between what you made in your private account and what you have to pay back, with interest, is your "profit" — or loss.

But that's not the end of the story. There are administrative costs that will reduce your accumulation by 5 percent — according to the President's Commission to Strengthen Social Security. Or possibly a lot more: In a typical private 401(k) account, it's about three times that much.

You're still not home free. The president's plan will require you to convert some or all of your accumulated sum to annual payments for the rest of your life. But this conversion is not cheap: In the private sector, it costs 10 to 20 percent of accumulated savings; if the government does it, maybe it can be kept to 5 percent.

Say you are a 27-year-old with average wages when the plan takes effect for you in 2011, and you put the maximum allowed into the private account. Let's also assume that the administrative and conversion costs are the cheapest imaginable.

When you retire after 40 years, your combined benefit from the private account and the traditional Social Security system will be $1,371 per month. This compares to $2,127 that the current Social Security program, if left alone, has promised to pay.

Supporters of privatization would reply that if absolutely nothing is done to increase Social Security's revenue — a very remote possibility — benefits will be cut by about 24 percent in 2053. But even then, the monthly benefit in the above example would be $1,625 — still 19 percent better than in privatization.

Interestingly, when the government takes back the money that it lent you, it doesn't come out of the private account that it went into — it is deducted from the benefit you receive from the traditional Social Security program. This will create the illusion that most of your benefits come from the private account — rather than from the traditional system. This indicates that the people who designed this privatization scheme want to undermine support for the traditional Social Security system — so as to get rid of Social Security as we know it altogether.

In the meantime, privatization won't make many dreams come true. The next time you hear someone telling you what a great deal it is, just tell them: Show me the money.